Private Cryptocurrencies – A Threat to the Bank?

The deputy governor of Bank of Canada said the institution does not plan to issue digital currency in the near future. However, it will have a prototype ready to launch in the event of threats to the Canadian dollar from private cryptocurrencies.

Tim Lane, Deputy Governor of the Canadian Central Bank, made the statements at the FinTech RDV 2020 conference in Montreal. His speech, entitled “Money and Payments in the Digital Age”, addressed how the central bank approaches the idea of ​​CBDC. In his opinion, in the current economic situation, cash works.

Private Cryptocurrencies – A Threat to the Bank?

However, Bank of Canada wants to be prepared with a prototype that will be designed following consultations with a wide range of stakeholders. According to Lane’s statements, this central bank’s digital currency should have some essential features:

“Bank of Canada would design it to deliver the benefits of cash – secure, easy to access, private and a good value deposit – but in a digital version that consumers could use to buy things online or in person at a shop”.

The bank also considers private cryptocurrencies widely used as potential threats to the Canadian dollar. Lane explained:

“If one or more alternative digital currencies are to be widely used as an alternative to the Canadian dollar, then a central bank-issued digital currency could be used to defend monetary sovereignty.”

Bank of Canada was one of the most active institutions in studying the concept of CBDC. The bank carried out a pilot project on the Corda blockchain designed by R3. In May last year, the project was tested live in a cross-border settlement process with the Monetary Authority of Singapore.

However, the results of this pilot did not impress the institution:

“We have come to the conclusion that there is no compelling case for issuing a CBDC at this time. Canadians will continue to be well served by the existing payment ecosystem, provided it is upgraded and remains fit for purpose, ”

said Lane.